No Merging !
The Jet Airways chairman, Mr Naresh Goyal and the Kingfisher Airlines chairman, Mr Vijay Mallya, on Wednesday ruled out merger of India’s top two private airlines.
The two airlines account for about 60 per cent of the market share.
“There is no equity swap. Our understanding is for purely commercial alliance,” Dr Mallya said.
Speaking to the media, Mr Goyal said that the alliance is not a marriage of convenience and the consolidation in the aviation industry is inevitable.
He said, “It (alliance) had happened in the US and the Europe and it has happened for the first time in India.” He said that the rationalisation of routes, capacity and costs are essential for survival and that market share was not the answer to profitability.
“There are instances where fighting for market share made the companies go bankrupt in the US,” he added.
Mr Goyal said that the break-even point for the aviation sector is at 90 per cent capacity utilisation, while the companies are operating between 60-70 per cent.
“On top of this, international airlines are dumping capacity in India, lowering their prices knowing we cannot match the competition…. therefore we have to work together,” he said.
On the lay-off of 850 Jet Airways’ employees, Mr Goyal said those employees were on probation and the company has just not extended the probation.
He said even Air-India can join the alliance, if wants.
Later in the day, the Union civil aviation minister, Mr Praful Patel, said the government does not have any details of the deal. “In absence of such details, we cannot comment on it,” he added.
However, he said the government will not have any problem, if the alliance is within the rules and regulations of the aviation ministry.
The two airlines account for about 60 per cent of the market share.
“There is no equity swap. Our understanding is for purely commercial alliance,” Dr Mallya said.
Speaking to the media, Mr Goyal said that the alliance is not a marriage of convenience and the consolidation in the aviation industry is inevitable.
He said, “It (alliance) had happened in the US and the Europe and it has happened for the first time in India.” He said that the rationalisation of routes, capacity and costs are essential for survival and that market share was not the answer to profitability.
“There are instances where fighting for market share made the companies go bankrupt in the US,” he added.
Mr Goyal said that the break-even point for the aviation sector is at 90 per cent capacity utilisation, while the companies are operating between 60-70 per cent.
“On top of this, international airlines are dumping capacity in India, lowering their prices knowing we cannot match the competition…. therefore we have to work together,” he said.
On the lay-off of 850 Jet Airways’ employees, Mr Goyal said those employees were on probation and the company has just not extended the probation.
He said even Air-India can join the alliance, if wants.
Later in the day, the Union civil aviation minister, Mr Praful Patel, said the government does not have any details of the deal. “In absence of such details, we cannot comment on it,” he added.
However, he said the government will not have any problem, if the alliance is within the rules and regulations of the aviation ministry.
posted by Gopalakrishnan at
10:00 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home